AHDB BPEX Pig Market Weekly

AHDB UK Market Survey - 18 May 2012

British pork will soon be on menus in China following a deal reached by Agriculture Minister Jim Paice.

UK pig meat heading for China

He announced the landmark agreement while on a mission to China to boost trade for British food and farming. BPEX Chairman Stewart Houston, who accompanied the minister on the mission, said, “This is a wonderful achievement and something we have been working towards for several years in close co-operation with Defra and the British embassy in Beijing.”

China is both the biggest producer and consumer of pig meat in the world, accounting for nearly half of the global total. Although it is largely self-sufficient, the scale of the Chinese market means that it is still among the world’s largest importers of pig meat. Last year, China imported 467,000 tonnes of fresh/frozen pork and 883,000 tonnes of offal. The total value of this trade was over US$2 billion. Pork imports were more than double those in 2010, while offal exports were up by more than a quarter because of lower domestic production following disease problems and poor profitability. Chinese production is expected to recover this year so imports will likely be lower than in 2011, with some forecasts suggesting they may be down by a quarter.

The United States is the main supplier of pig meat to China, accounting for around half of pork shipments and 60 per cent of offal. The other major supplier is the EU, which last year exported 142,000 tonnes of pork and 269,000 tonnes of offal to China. The value of this trade was €483 million. The main EU Member States exporting to China in 2011 were Denmark, Germany, Spain and France, each of which shipped over €80 million worth of pig meat. Denmark accounted for over half of the offal sent to China from the EU.

As a smaller producer and exporter of pig meat, the UK may not be able to match the main EU suppliers to China. Nevertheless, the size of the Chinese market represents a significant opportunity for UK exporters, particularly given the Chinese preference for offal and other cuts for which there is limited domestic demand. Once trade is established, the annual value could be worth up to £50 million, equivalent to about 20 per cent of current UK pig meat export value.

Pig market trends

Prices

Although the rise in finished pig prices continued
during week ended 12 May, the rate of increase
slowed. The DAPP EU Spec increased by just
0.18p to average 148.39p per kg. The cold and
wet weather isn't helping consumer demand for
pig meat, both at home and in the EU, while the
strengthening of the pound against the euro has
reduced the competitiveness of UK product.

Demand for weaners was limited, with feed
prices remaining high and some seasonal easing
back of prices expected in the autumn, when
today’s weaners will be ready for slaughter. As a
result, the average 30kg weaner price fell be
nearly a pound to £44.29 per head for week
ending 19 May. This was below year earlier
levels for the first time since November.

Trade

UK pork imports remained subdued during
March, continuing the trend from the previous
two months. Shipments were 13 per cent lower
than in March 2011 at 27,200 tonnes, although
this does represent a modest recovery from
February’s low point. Germany and Spain
continued their strong performance, while
Denmark also shipped more pork than a year
earlier. All other major suppliers sent lower
quantities to the UK. Imports during the first
quarter were 15 per cent down on the same
period last year.

Bacon imports to the UK were also lower, with
shipments totalling 25,000 tonnes, eight per cent
lower than in March 2011. This is a slightly
smaller fall than in the previous two months,
with the figure for the first quarter ten per cent
lower than a year earlier. The monthly fall was
driven by a 17 per cent drop in shipments from
the Netherlands, partly offset by small rises from
the two other major suppliers, Denmark and
Germany.

UK exports of pork in March were four per cent
lower than a year earlier at 11,800 tonnes,
although with higher prices the value of exports
rose by nine per cent to £15.2 million.
Shipments to Germany, Hong Kong and the
Netherlands were all lower; with Ireland and
Denmark the main destinations taking increased
quantities. Despite the drop in March, exports
for the year to date were still one per cent higher
than in the first quarter of 2011. In contrast, offal
exports remained strong during March, up by 21
per cent year on year to 3,800 tonnes, despite a
fall in shipments to Hong Kong, the largest
market.